Tree Seedlings has the following current-year purchases and sales for its only product. DateActivitiesUnits Acquired at CostUnits Sold at Retail Jan.1 Beginning inventory 40units@ $2=$80 Jan.3 Sales 30units@ $8 Feb.14 Purchase 70units@ $3=$210 Feb.15 Sales 60units@ $8 June30 Purchase 90units@ $4=$360 Nov.6 Sales 86units@ $8 Nov.19 Purchase 20units@ $5=$100 Totals 220units $750 176units Required:The company uses a perpetual inventory system.a. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.b. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.c. Compute the gross margin for each method.

FIFO: In First-in-First-Out method, items purchased initially are sold first. So, the value of the…

Answered: The company uses a perpetual inventory…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Tree Seedlings has the following current-year purchases and sales for its only product.

Date	Activities	Units Acquired at Cost	Units Sold at Retail
	Jan.	1		Beginning inventory	40	units	@ $2	=	$	80
	Jan.	3		Sales							30	units	@ $8
	Feb.	14		Purchase	70	units	@ $3	=	$	210
	Feb.	15		Sales							60	units	@ $8
	June	30		Purchase	90	units	@ $4	=	$	360
	Nov.	6		Sales							86	units	@ $8
	Nov.	19		Purchase	20	units	@ $5	=	$	100
				Totals	220	units			$	750	176	units

Required:
The company uses a perpetual inventory system.

a. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.
b. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.
c. Compute the gross margin for each method.

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